‘Clerical error’ causes new Crozer owner to bounce checks

The for-profit corporation that acquired the Crozer-Keystone Health System last year has bounced tax payment checks to the three local school districts, including a $1.1 million tax check to the Upper Darby School District.

Prospect Medical Holdings Inc. also bounced checks issued to the Ridley and Springfield School Districts, though a spokesman for the company attributed the problem to a “clerical error.”

The $1,100,504 Upper Darby payment, submitted Aug. 28, was for four properties in the district. Duane Morris attorney Luke P. McGloughlin stated in a letter to tax collector Patrick Grant at that time that the payment was being made “under protest” due to a pending assessment appeal for those parcels.

The payment was returned as a charge back by Wells Fargo Bank for insufficient funds, according to a letter to Prospect from Grant dated Sept. 6.

Grant indicated Prospect would owe an additional $140 for the cost charged by the bank and that a flat amount of $1,122,964 plus $140 would be due if the bill was not paid by Sept. 13. District Solicitor Frank Catania said Friday that Prospect had contacted the business office and indicated a payment would be made by Oct. 31.

Prospect, which is owned by the multi-billion dollar private equity hedge fund Leonard Green & Partners, also bounced a check for more than $1 million to the Springfield School District, according to a person with knowledge of that instance. Ridley administrators could not be reached late Friday.

“Because of a clerical error, payment was incorrectly issued to three school districts … and we were unable to notify them in time of the error,” said Prospect spokesman Andrew Bastin. “We have informed the school districts that we will be paying them in full prior to the tax payment deadline. It’s important to note that, despite this clerical error, our tax payments are not overdue. We have paid all our taxes on time in the past and we will continue to do so in the future.” Real estate tax bills for the four Upper Darby properties show a 2-percent discount rate is due by Aug. 31, but a flat rate is acceptable until Oct. 31. Adding the tax due on those properties under the discounted rate totals the $1,100,504.96 check Prospect issued.

Bastin said the bounced checks should not be viewed as a reflection on the financial stability of Crozer-Keystone Health System or Prospect Medical Holdings.

“We are committed to paying our fair share of taxes and we have asked our local tax authorities to review our assessments to make sure they are appropriate and accurate,” he said.

Prospect entered into a $300 million asset acquisition with Crozer in January 2016. The transaction closed in June 2016, but there is an ongoing legal dispute in which Crozer claims Prospect still owes more than $21.5 million.

Attorney Rocco Imperatrice III, representing Crozer, filed a $21.8 million judgment against Prospect last month after it failed to deposit $21,535,463 into escrow as part of a settlement agreement in that case. The judgment amount reflects interest and attorney’s fees Imperatrice said Prospect is now obligated to pay under a court order from Delaware County Court of Common Pleas Judge Barry Dozor.

Arbitration is meanwhile continuing, according to Imperatrice, and will likely conclude sometime in November.